Now that the Supreme Court has definitively ruled that disparate impact claims are valid under the Fair Housing Act (discussed in further detail here), HUD has issued guidance regarding one common multifamily property policy that it believes has a discriminatory effect on minorities—criminal background screening.

In light of statistics demonstrating that African Americans and Hispanics are incarcerated at rates disproportionate to their share of the general population, HUD warned in guidance published on April 4, 2016 that criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers. Accordingly, landlords and management companies will need to have a substantial, legitimate, and nondiscriminatory reason for implementing a policy which considers criminal records in the housing application process. Moreover, landlords and management should ensure that the interest achieved by their criminal background screening policy cannot be achieved by another practice that has a less discriminatory effect.

So does that mean that you cannot consider a prospect’s criminal background at all during the application process? Not exactly. HUD seems to agree that ensuring resident safety and protecting property are likely to be considered substantial and legitimate interests. But it also warns that your criminal background policy darn sure better be tailored to achieve those goals. In terms of actual, specific (and useful) guidance, HUD does make two clear assertions: 1) a policy that excludes prospects because of one or more prior arrests (without a conviction) is unlikely to achieve a substantial, legitimate, nondiscriminatory interest; and 2) a policy that imposes a blanket prohibition on any person with any conviction (without any consideration of when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since) is also unlikely to achieve a substantial, legitimate, nondiscriminatory interest.

So what can you do? Simple—sit down, and review your criminal background policy to make sure that it is tailored to meet your policy goals (such as protection of residents and property). In essence, make sure that your policy only excludes based on criminal conduct that indicates a demonstrable risk to resident safety and/or property. And make sure that you are taking into account mitigating factors, such as the amount of time that has passed since the conviction. In other words, while you may be fine with a policy that excludes prospects with a violent felony conviction in the past seven years (absent any mitigating circumstance), you’re probably going to want to rethink a policy that excludes any prospect with a minor traffic offense. The bottom-line is that you need to sit down and give some serious (and documented) thought to your criminal background policy to make sure that it is truly achieving your policy goals.